Page 78 - Acertaining Economic Damages Calculation

The expert needs to have carefully considered how the information will be used to ensure that the
data sample is large enough and contains sufficient information. In addition, complexities arise
because some respondents selected to be surveyed will not be reachable or will be unwilling to
complete a survey. The expert must devise a plan to deal with such contingencies and be confi-
dent that such problems do not bias the results. Experts generally have an obligation to use data
that are as accurate as possible, meaning that the expert has used every practical means to elimi-
nate erroneous information. Experts should also perform cross checks with other data, to the ex-
tent possible, to demonstrate completeness and reliability. When data are inherently inaccurate
because of random influences, validity requires absence of bias or adjustment for bias. fn 17

The following case provides further insight into how a court may view the use of customer survey data.

Apple, Inc. v. Motorola, Inc., 2012 WL 1959560 (N.D. Ill. May 22, 2012) fn 18

This case involved a patent infringement action brought forward by plaintiff Apple, Inc. against defend-
ant Motorola, Inc. over a number of Apple patents, including what was referred to as the ‘002 patent.
Apple contends that Motorola infringed on its patent by including Apple’s patented software program
that prevents partial obstruction of the notification window when an application is in use on its devices.

Apple’s damages expert expressed an opinion that damages were $14 million, which he testified repre-
sented a reasonable royalty for Motorola to have licensed the patented feature. The opinion was based,
in part, on a contemporaneous consumer survey conducted by Motorola prior to the litigation in which
respondents were asked to pick the top five main attributes of a Motorola cell phone that were among
their reasons for buying the phone. The expert assigned each attribute a value by multiplying the cost of
the device by the percentage of people who listed that attribute in their top five.

The court found this methodology to be problematic, concluding that, outside of the litigation context,
Apple’s expert would have conducted a different survey then the Motorola survey used.

Suppose [Expert] conducted the identical survey that he used in this litigation (that is, a Motorola
survey) and reported back to Motorola that the average value to the consumer was $0.80.
Motorola would say to him: "Dummy! You haven't estimated the value of the non-obstruction
feature. You've just estimated the value of the notification window. What you need to do is find
out how many consumers think it worthwhile to pay a higher price for a Motorola phone to avoid
occasional partial obstruction of that window. So you'll have to ask the survey respondents: How
often do you look at the notification window in an average day? What windows do you open
most frequently in an average day? Suppose the answer includes three windows which when
opened would partially obstruct the notification window. The next question would be: If each of
these windows, when opened, partially obstructed the notification window, would that be a big
annoyance, a little annoyance, or no annoyance? How much lower would the price of a

fn 17 Alan, Mark A., Hall, Robert E., and Lazear, Victoria, A., "Reference Guide on Estimation of Economic Damages", Reference
Manual on Scientific Evidence, 3rd Edition. (2011). The National Academies Press.

fn 18 Although this case was reversed by Apple, Inc. v. Motorola, Inc., 757 F.3d 1286 (Fed. Cir. 2014), this decision pertained to other
patents at issue, rather than for the patent discussed herein, which was not discussed in the appeal.

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